NEW YORK — Global stock markets rallied this week after the heads of three major central banks signaled, in unusually coordinated language, that the cycle of aggressive interest-rate increases that has defined the past three years is drawing to a close.
The benchmark index in New York closed at a record on Friday, capping its best week of the year. European shares climbed to a two-year high, and the Nikkei rose for a fifth consecutive session. Government bond yields, which move in the opposite direction of prices, fell across the board.
The catalyst was a sequence of statements beginning on Tuesday, when the chair of the Federal Reserve told a conference in Jackson Hole that “the balance of risks has shifted” — a phrase traders interpreted as opening the door to rate cuts as early as the next meeting. Within 48 hours, senior officials in Frankfurt and Tokyo had echoed the sentiment in their own carefully calibrated words.
“Central bankers rarely speak in chorus by accident,” said Ingrid Sorensen, chief strategist at Halvard Capital. “When three of them hum the same tune in the same week, the market is right to listen.”
The rally was broad but not universal. Bank stocks, which tend to profit from higher rates, lagged the indexes, and the dollar slipped to its weakest level against the euro since January. Gold touched a record on Thursday before retreating.
Beneath the optimism, strategists cautioned, sits a fragile assumption: that inflation, now running at 2.4 percent in the United States, will keep drifting toward target without a resurgence in energy prices or wages. “The market has priced a perfect landing,” Ms. Sorensen said. “Perfect landings are rare. That is why they have a name.”
